Order ID | 53563633773 |
Type | Essay |
Writer Level | Masters |
Style | APA |
Sources/References | 4 |
Perfect Number of Pages to Order | 5-10 Pages |
Marketing Failure Case Analysis
Marketing, Failure, Case, Analysis
Abstract
This paper will attempt to analyze the failure of the marketing action of the restaurant
called Passage 1901, located in the center of Baku. Once highly popular and predicted
to one of the hotspots of Baku’s dining and food industry, Passage 1901 did not meet
the expectation and failed miserably.
To correct the mistakes and return the former profitability, the restaurant management
did a marketing strategy from 2015 till 2016 that had mixed impact on the restaurant
profitability. The paper seeks to dissect the marketing strategy into its constituent parts
and analyze the mistakes and misdeed made during the implementation.
Upon the incisive analysis of the marketing strategy, I will proceed to provide several
recommendations in the framework of 4 Ps, product, price, place and promotion and
explain how effective use of marketing strategy can help the company bring back the
former profitability and customer base.
Introduction
Baku’s food and dining industry is one of the most vibrant parts of the economy,
generating millions of dollars and employing thousands of people. As a matter of fact,
world’s most famous food brands have established branches in book to take advantage
of the booming food and dining industry with local KFC restaurant branch being the
largest of its kind in the world.
The petrodollars flowing in and emerging middle and professional class have the main
driver behind this exponential growth. The restaurant owner, in our interview, cited the
same reasons for the opening of the restaurant in the city center. The growing
purchasing power of the local population allowed international brands to move in and
the owner of Passage 1901 wanted to carve out a niche for the restaurant and maintain
a good position in the market.
Passage 1901
Founded in 2007, Passage 1901 restaurant is one the largest restaurants in the country
that employed over 50 people at the height of business operations (Illustration 1). The
food and drinks offered at the restaurant ranged from a variety of local foods to
European, Asian and American foods. 2007 was a year of great excitement in
Azerbaijan as the first money from oil started to flow in and increase the purchasing
power of the local population, who could afford to dine at restaurants with an affordable
price.
The lower prices set by the management did indeed allow the restaurant to attract large
number of customers initially and gain a reputable position in the market. Another
competitive edge of the company lied in its conducive location, which was close to the
city center, office buildings, major highways and could easily be reached from any part
of the larger metropolitan area, said the director of the Passage 1901.
Combined with the increasing purchasing power, lack of market saturation and big
players in the area, strategic and conducive location of the area and relatively cheap
prices promised to make the Passage 1901 one of the most sought after and renown
places in the city. Although this was not to be the case as the number of customers
coming in to the restaurant in 2019 was the lowest figure over a decade, a factor which
propelled the company management to downsize the operations and lay off some staff
to be able to cover the increasing operating costs. Overall, the SWOT analysis for the
restaurant could be summarized as follows:
Illustration 1. Source: www.azerbaijan360.az
Strength Weakness Threats Opportunities
Excellent and central
location of the
company.
Affordable and cheap
menu prices and
availability of
discounts on terms
and conditions.
Lack of innovative Business
model and adherence to
tradition model. Lack of
exposure to the social media
and other media mediums.
Changing
landscape of
the food and
dining
industry,
Entry of
foreign and
famous
brands.
Emergence of
new type of
dining class
Lack of
competitions and
availability of
market niche to be
carved out.
Burgeoning food
and dining industry
and middle class in
Baku.
Passage 1901 is located on one of the most historic and famous streets in the city.
There was a special parking lot in front of the restaurant, so people had no problem
parking. In addition, the Passage 1901 was very close to the subway exit, and there are
many bus stations here. Therefore, it was very convenient for customers to go to the
restaurant. In addition, in Passage 1901, both European and Baku cuisine took a very
large place.
Not only locals but also foreign guests come here a lot. One of the reasons why many
foreign guests come here is that the walls of the restaurant are covered with a special
history of Azerbaijan. Some people describe this restaurant as a museum. The
restaurant menu is mostly cheaper than expensive restaurants, because this restaurant
is designed for people from all walks of life.
Azerbaijani restaurants are a bit old-fashioned compared to other countries. Many
restaurants in Azerbaijan do not advertise themselves. They expect only customers who
know them or passers-by to come in and eat. Because our restaurant is very old and
has a customer base, they don't spend a lot of money on advertising. The Buddha
shows us weakly in the market, when people see a restaurant, mainly on social media,
they are interested in it and want to go there.
In my interview, director mainly focused on the threats and underlined its role in the
failure of the business, in particular, the food industry in Baku since 2015 has been
going through transformations and evolutions. There were several threats to the
successful business operations of Passage, said the director.
However, what has emerged as the biggest threat to traditional restaurants was the
takeaway industry, especially with the entry of Uber Food, Wolt and other food take
away companies that sought to erode the market dominance of the restaurant business.
Another challenge to the restaurant was the branding problem.
Although the management anticipated the impact that take away food companies would
have on the general food and dining industry, their failure to incorporate it into their
marketing strategy and business plan led to the fall in restaurant profits and resulted in
the firing of several employees.
Another threat to the company was the branding crisis that was becoming obvious in the
food industry of Baku. By the time Passage 1901 was inaugurated, the food and dining
industry was still at infancy and the customers uninformed and uninterested in
restaurant branding.
However, as the time passed time and many more restaurants popped up across the
city, customers became much more conscious of the term brand and started to have a
discriminating and highly selective attitude when it comes to restaurant.
Long gone were the days when primary motive behind people’s restaurant decisions
were location and the price and emergence of new type of urban sophisticate class with
sophisticated brand awareness resulted in the decreasing customer numbers and
threatened the viability of the Passage 1901, said the director.
No matter how many restaurants there are in Azerbaijan, our restaurant has the
opportunity to bring itself to a better level by using the gaps. Our restaurant is far
superior to many restaurants in Azerbaijan in terms of price, quality and service. Our
weakness is that we only use social media like Instagram. However, if we use other
social media in the future and allocate more budget for advertising, then we can
increase our market share in Baku.
Marketing Plan and Actions Taken
As mentioned earlier, the restaurant management was not oblivious to the changing
dynamics of the food and dining industry and seeing the decreasing customer numbers
and falling profits, management decided to implement a specific marketing plan that
would stimulate the customer interest in Passage 1901 and increase the profits.
The way to achieve these was re-branding, thought the management. Within the
process of re-branding, company also sought to incorporate the restaurant to the
takeaway food industry by signing agreement with one of the transportation companies
mentioned above.
The management concluded that in order to rebrand the restaurant, there was an
imperative for the fundamental overhaul of the business model of the company and the
new mediums for communication and advertisement had to be put in place. The
marketing plan was three-pronged, which will be explained below.
Changes in Menu and Prices: Ever since the restaurant become operational, the main
modus operandi was to combine national and foreign cuisine and give the customers a
variety of options to choose one from.
The director said that the rationale for offering a combination of local and foreign food
was the assumption that people would still want to taste a local food in a fancy
restaurant and the emerging middle class would also want to have an option to choose
a foreign cuisine. In the new business plan, the idea was to put more focus on the
foreign food and decrease the number of the local cuisine.
The new marketing plan also envisioned the mixing of foreign and local cuisine, cooking
of local cuisine using foreign ingredients for local customers and dramatizing or
maximizing the “Azerbaijaniness” of the local cuisine for the foreign clients. As a matter
of fact, the change in menu has long been considered an integral and essential part of
the rebranding in the restaurant industry (Egan, 2018).
Another change in business model, said director, was to increase the previously low
prices and end the daily, weekly and seasonal campaigns. The director said that the
idea behind it was the assumption that no longer are people motivated by the low prices
and furthermore, there is a stigma attached to the low prices and that is there is a
popular perception that if the prices are low, then food must be of low quality.
The director said that, taking into account the impossibility of dispelling that popular
misconception, the restaurant management came to the conclusion that the only way to
dissociate Passage 1901 from low quality cheap restaurant misconception was to
increase the prices reasonably and end the discount campaigns once and forever with
the uniform and stable pricing strategy applied across the year.
Lean operation and design changes: The Passage 1901 is relatively large restaurant
with large tables suitable for the gathering of over 13-17 people (Illustration 2). Such
design choice was justified on the grounds of Azerbaijani’s affinity for large gathering
and chatty dinners. As the time passed by, this kind of structure created difficulties of its
own.
Long gone were the days when people dined with 10 other people and the occupation
of large tables by groups of 2 and 3 people did not allow the table to be used by other
customers. The director said that the problem was not obvious at the beginning, but the
changes in mentality and emergence of professional class led to a situation where
largest group of people did not exist 4 or 5 members.
Therefore, the restaurant management decided to completely overhaul the both interior
and exterior design of the place and make it leaner more operational by reducing the
number of chair and making the communication between customers and waiter/waitress
much smoother and effective.
As a result of the design and operation restructuring, the number of chairs were
reduced, the interior of the Passage 1901 was made much customer friendly and the
ordering and bill payment became much more operational. No longer large table
dominated the restaurant interior scene and the more focus was put on insuring that, no
one feels threatened
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